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By rule:
- Analyse present and learn from past, and act accordingly. Gives good indications in general, but the past never relives itself.

- Use experiences to make relevant predictions, which usually works. But sometimes nuts...

- Go-to answers to difficult political economic problem solving.

By discretion:
- Try to predict/create forecast about future economy and act accordingly. Which is great if you are Warren Buffett.

- Use reasoning to take measures in order to act to expected future scenarios.

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Rule -) it's good to be prepared for economic changes
-) on the other hand, we never know what to expect and it is difficult to predict the future

discretion -) policy can be adjusted to specific situation

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Marcel... Answer meeee

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policy by rule:

It requires less time to implement this policy, on the other hand it is not flexible

policy by discretion:

requires more time to answer to the shock though it is more flexible and precise because it is applied to the current circumstances.

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For by rule:
- Quick responses to fluctuations
- Transparency/Stability
- Avoid that change in the political landscape affects economic policies

For by discretion:
- Flexibility for unpredictable fluctuations
- Hard to predict the future

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policy by rule:

It requires less time to implement this policy, on the other hand it is not flexible

policy by discretion:

requires more time to answer to the shock though it is more flexible and precise because it is applied to the current circumstances.

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Arguments for rules:
- Do not trust policy makers
- Policy makers might not have the same interest as the society
- The time inconsitency of discretionary policy
- Policy makers can renege their announcement is discretionary

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advocates for policy conducted under rule:
- helps keep the central bank in place and ensures that policies are conducted by informed individuals who shares the same interests as society, there is no political foul play as society becomes more aware.
- helps maintain that policy makers stay credible such that they do not announce an action/policy and then renege from it to obtain a higher benefit once people change their expectation and the economy changes as a result. if policy makers in the long run aren't credible poicies lose the potential to be effective

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by discretion:
- not good since politicians can influence the economy for their own good
- quicker responses are possible
- time inconsistency possible (e.g. announced tax cuts do not happen)

by rule:
- consistent and reliable

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Policy conducted by discretion:

- since we have some inside and outside lag, it is necessary to make predictions regarding the future

Policy conducted by rule:
The Economy is hard to estimate
politicians are imperfect and dont have all knowledge, therefore it is wise to legislate based on current events

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rule:
- prevent policymakers from acting polical biased
- faster response to economic fluctuations
- consistency
- less coruption

discretion:
- adapt to every situation
- develop actions according to what is happening in the world economy

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by rule:
- easier to predict the economy's response to specific shocks
- more consistent
- reduces manipulation from politicians having ulterior motives.
by discretion:
- if the policy is reality-adjusted, it might be more accurate and provide better solutions.

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By rules:
Increased transparency when compared to discretion

By discretion:

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For Rules:
Policymakers wants the economy to preform well in an election year.
Rules ensure stability and consensus between initiatives.
Predictable environment is easier to conduct business in.
Offers high confidence
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For discretionary:
Adaptability to new unique situations.  (Take opportunity of) (AI and robots, or climate change)

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By discretion:
1. Because every situations differs. Consumer preferences or confidence might be different at a situation with same macroeconomic parameters and issues occurring.